No property tax increase in Penn Hills’ proposed municipal budget
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The Penn Hills manager has proposed a 2021 budget without a property tax hike, according to a draft published on the municipality’s website.
For the second straight year, Scott Andrejchak, the municipal manager, has proposed using $3 million from the budget’s carryover funds to balance the $34 million spending plan. Next year’s budget represents a 6% increase from last year’s.
The fund balance transfer comes despite a warning he issued last year against the practice.
In 2019’s budget preparation season, Andrejchak said the practice “creates the appearance of a balanced budget to postpone choices about revenues and expenses.”
Many services were curtailed or cut over the past eight months because of coronavirus restrictions, but those losses are expected to be more severe in the coming year.
“I think most of the pandemic stuff will manifest in 2021,” Andrejchak said. “So we have to be conservative and prepared for a downturn.”
The largest projected losses in revenue – around $850,000 – include business, mercantile and real estate taxes.
When asked why he has proposed using another $3 million of carryover funds to balance 2021’s spending plan, he said it was because last year’s fund balance transfer remained largely untouched. In fact, Andrejchak expects a small surplus, around $15,000, in 2020’s fund balance.
There are a number of reasons for that, Andrejchak said. Chief among those, ironically, was the coronavirus pandemic.
The pandemic forced the municipality to cut many services, including those from the library and senior centers. Penn Hills laid off 57 full- and part-time employees at the end of March. Benefits for the full-time employees were paid through June. Many of the full-time employees have since found other positions within the municipality or have retired, Andrejchak said. Some of the part-time employees were recalled.
Penn Hills also received a $325,000 injection from the coronavirus relief bill.
Another reason Andrejchak cited for a healthy fund balance was new leadership in the finance department and its effort to cut costs.
One of those cost-cutting measures will continue into 2021, according to Andrejchak’s proposal.
Starting in July or August of 2021, Andrejchak has proposed divesting the municipality’s financial obligation in order to allow a third-party organization – namely, Eastern Area Adult Services – to take over staffing needs for senior services.
The move would free up around $500,000 that had gone into paying salaries and benefits for those five full-time employees, who were since laid off.
Andrejchak first proposed the idea to council members in February to cut down the hours to 9 a.m. to 3:30 p.m. and switch the full-time positions to part-time positions.
At the time, Andrejchak said the change would save the municipality about $150,000 a year.
Restrictions from the coronavirus pandemic sped up those plans. The senior service center on Jefferson Road closed in March. The employees who were were laid off have either retired or found other positions within the municipality, Andrejchak said.
The center, along with the room dedicated for seniors at the William McKinley Citizens Center, remains closed. But services such as Meals on Wheels and grab-and-go lunches remain.
“The goal of Penn Hills should be to provide the best possible senior services in the most cost effective way possible. The 2021 budget takes a big step forward in accomplishing that goal by moving to a part-time budget and laying the groundwork to divest the services to a third-party agency as soon as the situation allows for it,” Andrejchak wrote in his budget message.
Another major item Andrejchak expects to be discussed the following year is the municipality’s garbage services contract, which expires at the end of 2021. Council raised property taxes in 2019 to pay for the new refuse contract with Republic Services.
The manager expects another property tax hike in 2022 to pay for the new agreement that will be negotiated next year.
Mayor Pauline Calabrese said the proposed budget is a good first draft, citing the possibility of ending the year with a small surplus as a win for Penn Hills.
“When I took office in 2020, I had no idea what the year held. But I’m so proud that, for the first time in years, we’re going to end without a deficit and probably a surplus. We’re moving in the right direction,” she said.
But because Andrejchak has suggested using another $3 million transfer of carryover funds, she encouraged all the municipality’s department heads to go back and “sharpen their pencils” as they work through adopting a final budget.
“I’d like to see this a little tighter,” Calabrese said. “And every taxpayer and citizen should take a look at this budget because now is the time for input. This is not the final draft.”
Council will discuss the proposed budget during its Nov. 16 meeting. It starts at 7 p.m. and will be held virtually. Directions for joining the meeting can be found on the municipality’s website.
The 155-page budget draft can also be viewed on Penn Hills’ website.
A second discussion is scheduled to take place Nov. 23. Council expects to adopt a final budget during a Dec. 21 meeting.